Drefs v. Wadsworth — 45 N.Y. St. Rep. 466

Majority

p. 466

Charles A. Drefs et al., Resp’ts, v. Henry C. Wadsworth, Impl’d, App’lt.

(Supreme Court, General Term, Fifth Department,

Filed April 13, 1892.)

Headnote

Deed—Fraud—Bona ride purchaser.

Plaintiffs, a land company, conveyed certain land to a manufacturing company in consideration of its erecting a factory thereon, and conducting its business therein for three years, in default of which the title was to revert. The factory was not built, but the land was conveyed to defendant, and the factory was built on land conveyed by him in exchange therefor. In an action to set aside the deeds, no fraud on defendant's part was found, but it was found that he knew that the conveyance to his grantors was conditional, and that the entire consideration thereof had failed. Held, that he was not a bona fide purchaser, and that a judgment in favor of plaintiffs was properly granted.

Appeal by the defendant, Henry C. Wadsworth, from a judgment entered in Erie county, February 20,1891, upon the decision ■of the court at special term.

Henry ■ G. Wadsioorlh, app’lt in person; • H. M. Silver, for resp’ts.

This action was brought to set aside the record ■of two deeds of conveyance of the lands described in the complaint, and to obtain possession of the premises. The first of these ■deeds was executed by the plaintiffs - and one William 0. Smith to David P. Stewart and George A. Otis, on the 9th day of July, 1887, and acknowledged on the 12th day of that month. The other one, being a quit-claim deed, was made by Stewart and Otis to the appellant Henry 0. Wadsworth, bearing date the 7th day ■of January, 1888, and acknowledged on the same day. .

In the mohth of February, 1887, the plaintiffs and one William C. Smith formed a copartnership under the firm name of the Le Roy Avenue Land Company, and as such firm bought a tract ■of land in the suburbs of the city of Buffalo and called it Kensington, and divided the same into lots for market. The lands ■described in the complaint were a portion of the Kensington tract. This land company, in the month of May, 1887, entered into a verbal contract with the defendants, Stewart and Otis, by which it .agreed to convey to the latter, who were doing business under the name of the Stewart Heater Company, the lands described in the •complaint, and the purchasers agreed to construct a factory upon the lands so conveyed, and to carry on their manufacturing business in such factory for the period of three years after the ■erection of the building, which was to be done at once, in default of which the lands should revert to the Le Roy Avenue Land ■Company. The deed was accordingly given to the defendants, Stewart and Otis, but the latter failed and refused to execute and deliver to the Le Roy Avenue Land Company the agreement in writing which they previously agreed to make. Stewart and Otis .also failed and refused to build their factory upon the lands •described. In violation of their agreement and of the condition, upon which the deed had been delivered to them, Stewart and Otis, on the 7th day of January, 1888, conveyed these premises to the

p. 467

defendant, Henry C. Wadsworth, by deed which Wadsworth procured to be recorded in the proper county clerk’s office.

The trial court has found as a fact, that at the time of receiving this deed of conveyance the defendant, Wadsworth, had full knowledge as to the consideration of the conveyance of the premises by the Le Boy Land Company to the defendants, Stewart and Otis, and of the failure and refusal of said Stewart and Otis to perform their agreement. Stewart and Otis, after receiving the deed from Wadsworth, built what" is called the Stewart Heater Company buildings upon such lands, and not upon those that had been conveyed to them by the plaintiffs.

There is but one disputed question of fact in the case, and that relates to the knowledge of the defendant, Wadsworth, of the consideration and condition upon which the conveyance of the plaintiffs had been delivered to Stewart and Otis and of the failure of Stewart & Otis to perform their agreement. Without referring to the testimony of the defendant Wadsworth, in detail, it appears that no other reasonable conclusion could have been reached by the learned trial justice, even had the case of the plaintiffs depended on it alone.

The court has found that Stewart and Otis were guilty of fraud in their part of the transaction, by which they, in violation of the condition of their agreement with the plaintiffs, conveyed these lands to Wadsworth. Though it has not found, as against Wads-worth, the existence of any fraud, yet, it has held him liable for receiving the deed of the lands when he had actual knowledge that the conveyance to his grantors was made conditionally, and that the entire consideration of the deed had failed. This finding was. just and discriminating; for, in respect to motive and interest; there appears nothing against the appellant beyond a great anxiety to exploit his own lands lying in the same neighborhood, in which effort zeal of competition seems momentarily to have smothered his appreciation of the facts relating to the title of Stewart and Otis.

We think, also, that the special term made a correct disposition of the question of costs, and that the judgment appealed from should be affirmed.

Judgment appealed from affirmed, with costs.

Dwight, P. J., and Lewis, J., concur.